SECTION 12. PAPERWORK

REDUCTION ACT

The collections of information contained in this revenue procedure have been submitted to the Office of Management and Budget for review and approval in accordance with the Paperwork Reduction Act (44 U.S.C. 3507(c)) under control number _____.

.01 Audit Protection

(1) In general . Except as provided in section 8.01(2) of this revenue procedure, a taxpayer that files a Form 1128 in compliance with all the applicable provisions of this revenue procedure will not be required by the Service to change its annual accounting period for a taxable year prior to the first effective year.

(2) Exceptions . The Service may change a taxpayer’s annual accounting period for a prior taxable year if:

(a) the taxpayer withdraws or does not perfect its request;

(b) the national office denies the request;

(c) the taxpayer declines to implement the change;

(d) the taxpayer implements the change but does not comply with all the applicable provisions of this revenue procedure and the letter ruling granting permission for the change; or

(e) the national office modifies or revokes the ruling because there has been a misstatement or omission of material facts.

.02 Subsequently required changes .

(1) In general . A taxpayer that adopts, changes, or retains its annual accounting period pursuant to this revenue procedure may be required thereafter to change its annual accounting period for the following reasons:

(a) the enactment of legislation; (b) a decision of the United States Supreme Court;

(c) the issuance of temporary or final regulations;

(d) the issuance of a revenue ruling, revenue procedure, notice, or other statement published in the Internal Revenue Bulletin;

(e) the issuance of written notice to the taxpayer that the change in accounting period was granted in error or is not in accord with the current views of the Service; or

(f) a change in the material facts on which the approval was based.

(2) Retroactive change or modifica- tion . Except in rare or unusual circum

stances, if a taxpayer that adopted, changed, or retained its annual accounting period under this revenue procedure is subsequently required under section 8.02(1) of this revenue procedure to change its annual accounting period, the required change will not be applied retroactively provided that:

(a) the taxpayer complied with all the applicable provisions of the letter ruling granting permission for the change and this revenue procedure;

(b) there has been no misstatement or omission of material facts;

(c) there has been no change in the material facts on which the approval was based;

(d) there has been no change in the applicable law; and

(e) the taxpayer to whom approval was granted acted in good faith in relying on the approval and applying the change retroactively would be to the taxpayer’s detriment.